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Investing.com - Morgan Stanley initiated coverage on Tekscend Photomask (429A:JP) with an Equalweight rating and a price target of JPY3,700.00 on Tuesday.
The investment bank identified Tekscend as a leading player in the merchant mask shop industry, forecasting high single-digit market growth over the next five years. This growth is expected to be driven by increasing outsourcing demand from captive mask shops and growing demand for high-priced advanced masks in the sub-28nm category.
Despite positive long-term prospects, Morgan Stanley noted that fixed cost growth in fiscal years 2026-2027 could limit near-term margin expansion. These costs stem from the company’s investments in new plants and production capacity for advanced masks.
The price target of JPY3,700 is based on a price-to-earnings multiple of 17 times the fiscal 2027 estimated earnings per share of JPY219, which aligns with the average of comparable semiconductor device-related manufacturers.
Morgan Stanley expects the company’s major investments to fully contribute to sales by fiscal 2028, which it considers the inflection point, but notes this timeframe is still distant and cites current concerns about competition in China as additional factors in its Equalweight rating.
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